Van Dyck Law, LLC is a full service Estate Planning & Elder Law practice. They write about comprehensive planning in the areas of wills, trusts, powers of attorney, medical directives, Elder Law and probate & estate administration.

August 2015

08/31/2015

Texas Attorney General Ken Paxton is already facing a felony indictment. Now, his role in a trust case is being called into question.

Tanner Hunt, the son of billionaire Ray Hunt, passed away with a large trust fund and two minor daughters. When minors could receive an inheritance, it is normal for a court to appoint a Guardian ad Litem for them. This is an attorney who is supposed to represent what is in the best interests of the minors.

In the Hunt case, current Texas Attorney General Ken Paxton was appointed as the Guardian ad Litem for the minor daughters. Questions are being asked about Paxton's role in participating in negotiations that would have potentially bought the daughters out of any interest in the Hunt trust for a substantially lower amount than they would have otherwise been entitled to.

It has also been reported that Paxton had improper contact with the opposition attorney and that the judge who appointed Paxton to the case recused himself from it because of contact with that same attorney. The Wills, Trusts & Estates Prof Blog reports in "Texas Attorney General Played Dubious Role In Hunt Estate Battle" that no investigation is being conducted into this matter.

This case highlights the importance of naming a guardian for any minor children you have in your will. If you do not do it, then a judge will appoint someone. Often the court's appointment will be a local attorney, who may or may not have your children's best interests in mind.

A judge does not have to appoint the guardian you designate, but making your wishes known will carry great weight. Most judges will only appoint someone else if it is obvious that the parents' choice was completely inappropriate.

Contact an experienced estate planning attorney to help you get this essential appointment right.

08/27/2015

When a person promises to give a certain inheritance to another person and breaks that promise in a will, it is possible to challenge the will. If the existence of the promise can be proved, courts might uphold it if they find it is legally binding. One case in Australia illustrates that, but it is unusual because of the nature of the promise.

Court documents in Australia tell the story of a woman who was sexually abused by her father beginning at the age of 14 and the abuse continued for nearly a year. The woman told her mother who promised to put an end to it. The Age Victoria reported this story in "Woman sues mother over inheritance after keeping father's sexual abuse secret." For her part, however, the mother refused to leave her husband and asked the daughter not to inform the police.

The mother's reasoning was that the couple was putting together a large estate and if she left the marriage, her daughter would not get any of it. In exchange for not telling authorities about the abuse, the mother promised the daughter half of her estate.

Many years later, when the mother passed away, her will broke the deal. She left the daughter only 33% of the estate. The mother also cut the daughter's son out of the will completely because when he was five he too was abused by the father and instead of remaining quiet he told the authorities. The woman sued her mother's estate. The Australian court agreed with her position.

It awarded additional funds from the estate be given to the daughter and the grandson. The court reasoned that the mother had a moral duty to protect her daughter and to put her daughter's happiness and welfare before the estate. According to the court, the mother failed in this moral duty and therefore had harmed her daughter in a way for which compensation was deserved.

08/26/2015

The IRS has long been upset that courts have allowed wealthy families to put their assets in family partnerships or limited liability companies and receive tax discounts on assets that have an easy to determine value. New regulations are expected soon that could put an end to the IRS's consternation.

The idea behind family partnerships and LLCs is rather simple. These vehicles allow families to jointly own assets and provide an easy way for those assets to be distributed if one of the family member owners passes away.

The practice began as a way to handle control of family-owned businesses. However, when a family-owned business is owned by a family legal entity, the only way anyone else could buy into the business is by becoming a member of the partnership or LLC.

For this reason difficult to value property, like businesses, have traditionally received a valuation discount for tax purposes. The theory was that because of the nature of the ownership situation, third-party buyers would expect a discounted price.

The IRS began to have problems however when wealthy people began putting easy to value property into the family partnerships, such as securities and even cash. Many people sought to get tax discounts on that property, and when challenged by the IRS, the wealthy people often won in court.

What precisely the new rules will contain is still unknown. However, if you use a family partnership, now would be a good time to speak with your estate planning attorney to see what, if any, changes you need to make.

08/25/2015

One of the standards of local TV news is a segment that has a reporter investigate and try to help with a community member's problems. TV stations like it because people give them the stories rather than the station having to go find one and helping viewers increases viewership and ratings. One of these segments in Denver recently highlighted a problem that a widow has been having getting funds from a bank.

Four months after her husband Jay passed away, Sharon Pallat went to the bank where Jay kept his accounts. It just happened to be a local branch of Wells Fargo.

She was there to close all the accounts and get all of the money from them to which she was legally entitled. Wells Fargo was happy to help at the time and promptly closed all of the accounts, except for one investment account.

The bank said this account would take a little bit more time to close out. That was two years ago. Despite repeated requests, Sharon Pallat is still waiting for Wells Fargo to close out the account and give her the money. Whenever she asks, she gets the runaround.

The station assigned a reporter to investigate the matter in an attempt to help Pallat get the money from the bank. The reporter got the runaround also. Wells Fargo still has not told anyone what is going on. The TV station says it will continue to stay on the story until it gets answers. For Pallat's sake, hopefully that will not take another two years.

08/24/2015

The latest in a long string of battles between Jimi Hendrix's siblings may have been settled, but with proper estate planning it might not have happened at all.

When Jimi Hendrix passed away unexpectedly, he left behind perhaps the greatest rock guitarist legacy of all time. His fame has hardly diminished in the three decades since.

His brother Leon Hendrix and his adopted sister Janie Hendrix have been fighting with each other over that legacy. Both of them have sought to profit from it and have worked at cross-purposes. The latest battle between them was over a trademark infringement lawsuit.

The first was that Jimi Hendrix passed away without having created a will or having done any other form of estate planning. By law his estate, including the rights to his music and image, went to his father James. It is unknown if Jimi would have wanted his father to control everything, or even anything at all.

Second, James Hendrix may have compounded the problem in his will, which left the entire estate to Janie and excluded Leon. While that will has been upheld in court and Janie legally controls Jimi Hendrix's legacy, that has not stopped Leon from attempting to profit off it as well. That is what led to the latest feud between Janie and Leon.

We may never know whether the feuding could have been avoided had either Jimi Hendrix had a will or James Hendrix had a will that more equitably divided the estate. It certainly would not have hurt the situation.

You may not be a rock star, but just the same, contact an estate planning attorney to help you avoid any family drama after you pass.

08/21/2015

You don’t have to be a CEO or multimillionaire to benefit from a trust. If you have highly specific wishes on how and when you want your estate to be distributed among your heirs, then a trust could be appropriate. Also, you might be interested in setting up a trust if you’d like to avoid the time-consuming, usually expensive and always public process of probate. Some types of trusts may also help protect your estate from lawsuits and creditors. Currently, only a small percentage of Americans are subject to estate taxes, but estate-tax laws change, so things may be different in the future.

The Bryan County (GA) News published an article, “What should you know about trusts,” that gives some good advice. The first tip is if you think a trust might be a good fit, you need to work with an experienced estate-planning attorney. Trusts are designed to be highly effective estate-planning vehicles, but they also can be complex. Not all attorneys know enough about them to set them up and administer them properly. Seek a qualified estate planning attorney.

Selecting a trustee is an important decision, as he or she is legally bound to manage the trust’s assets for your beneficiaries. Before you select your oldest daughter or another family member, ask these questions:

Does he or she have the experience and knowledge to manage your financial affairs in a competent manner?

If she must make a decision that may impact family members, will she act in a fair and unbiased manner?

Will naming a family member as trustee create issues for the family?

Does your prospective trustee have the time to manage your trust?

Does she want this major responsibility?

Do you have another person in mind to serve as trustee if the trustee you selected can’t do it?

Give considerable thought into who you ask to take on these roles. You can also ask a financial institution to serve as trustee, but be sure to inquire about costs and the services they provide.

Once you start these plans, it’s a good idea talk to your family about your wishes and other beneficiaries of your estate. People get hurt feelings if they have no idea what to expect. Get your loved ones on board with your estate plan so that you’ll feel even more comfortable in putting your plans in place.

08/20/2015

Parents of college-bound students may be so distracted by tuition payments and dorm-room shopping that they forget one important fact: your 18-year-old “child” is a legal adult. While you may still be supporting them financially, certain aspects of their lives will no longer fall under your control. Here are a few back-to-school preparations to consider that will aid your college freshman far more than XL twin sheets and a mini-fridge.

The Atlanta Journal-Constitution recently published an article “How to prepare for kid going off to college.” The article gave some good advice on getting you and your child ready for their freshman year in the areas of healthcare and credit cards.

Health care: When a child turns 18, you are able to continue to keep him/her on your insurance plan, but they’re considered a legal adult under HIPAA as far as disclosing health information. As a parent, you’re no longer legally permitted to access their health information when they go off to college and get sick or if they’re in a car accident and in the hospital. Because of the HIPAA restrictions, you should have an estate-planning attorney draw up a health-care power of attorney which names a parent or parents as their health-care agent. That way you can speak to healthcare professionals on their behalf if they are incapacitated, and you can obtain their medical information. Have a conversation with your child about the changes that happen when they become an adult, and how a health-care power of attorney will protect them. Keep a copy of the document at home and have your son or daughter keep a copy at school. Scan it as well so you have it in electronic format to email to a physician or to an ER if needed.

Credit cards: Anyone under 21 applying for a credit card must have an independent source of funds to pay the bills, so that’s good news for parents. Many college freshmen use credit cards cosigned by parents. Parents should sign up for mobile alerts to monitor their student’s expenses, and talk to them about budgeting.

If your child goes on a shopping spree and there are payment issues, your credit is going to take a hit. You can avoid this by paying the bills yourself and having your kid reimburse you for his or her expenses each month. You can also go with a debit card instead of a credit card. When the money is gone, it’s gone. Another option is to add your child as an authorized user on your account so that he will have his own card and start to build a credit history. However, you’re the one managing the account.

While you’re thinking about all of these important issues, you also should take the time to review your estate planning now that your son or daughter is an adult and possibly is no longer living at home. Talk to your estate planning attorney about some of the common changes people consider at this point in the life of a family.

08/19/2015

It may be an unpleasant task to think about your own mortality, but the fact is, writing a will is one of the smartest financial planning activities you can do. Given this, Fox Business asked some of its contributors to discuss some important things to know before writing a will.

1. A will doesn't actually cover all of your assets. If you own property in accounts that have beneficiary designations (IRAs, 401k’s, and life insurance policies), then the people you choose as beneficiaries will inherit those proceeds, regardless of what your will says. And if you own property in joint tenancy with rights of survivorship, your joint tenant will take full possession automatically at your death. Pay-on-death bank accounts likewise give the surviving account holder the rights to withdraw all of the money when you pass away. Also, property held in trust is handled outside of probate.

Make sure your beneficiary designations are consistent with your will. If you make changes to your will, you should review those beneficiary designations to see if similar changes are needed. If you fail to do this, your effort to update your estate planning could create major gaps that will wreck your plans for the distribution of assets after death.

2. Naming your will's executor takes some thought. The executor is the individual in charge of taking care of your affairs and ensuring that your will is executed as you stipulated. This is a big decision: the executor is responsible for several extremely important tasks. These include:

Distributing assets as directed by the will.

Paying bills and taxes on behalf of the estate.

Appearing at legal proceedings for the estate.

Maintaining property until the estate settles.

You need to choose the right person for this important job. Many people select their spouse, an adult child, or a trusted friend. But you can also name an attorney as executor. You also can name joint executors and alternates in case the executor you choose can’t serve or he passes away before you do.

Consider these thoughts when selecting an executor. It should be someone you trust to make the right decisions, and a person who is smart enough to ask for help from a qualified estate planning attorney when they need it. Naming several of your children as co-executors might be hazardous, as this could lead to arguments. Your executor doesn't need to be a financial guru, but should be a person you trust with good business and common sense.

3. Take extra care in writing your will if you have young children. In many instances, children can’t deal with the responsibility of inheriting property. Also, if your son or daughter inherits property outright when they're still a minor, the probate court will appoint an individual to be a property guardian if you don't. So it makes total sense to carefully consider whom you want managing your assets for your child after you pass. This is especially vital because a court-appointed guardian will hand over all the inherited property to your child on the day he or she turns 18.

Take some time and think about how you want to address these issues. Your estate planning attorney can help with planning.

08/18/2015

Estate planning requires clients to prepare for a future they won't be here to see. That idea can be disconcerting, so it's no surprise that advisors say the largest obstacles to successful estate planning revolve around clients' anxieties about what the world will be like without them. Those fears can lead to procrastination, indecision and inattention. "The first barrier we run into is people ignoring doing estate planning at all," says advisor Stewart Welch, founder of the Welch Group in Birmingham, Ala. "They don't have a will, or it's 15 years old – they just don't do anything."

According to an article on financial-planning.com, “3 Biggest Barriers to Successful Estate Planning,” there are major obstacles that some folks face when they think about estate planning. I can sum it up in two words: “Get Going!” Talk to your estate planning attorney now—don’t put it off.

1. Procrastination. Fear is a major contributor to procrastination. You know, dealing with your own mortality… who likes to think about that? We’re always too busy, and there’s always something better to do, like clean the garage or organize your sock drawer. It’s easier to let that fear of our mortality grow than to face it.

2. Indecision. Some folks put off doing anything because they are riddled with indecision. There are too many decisions to make, so it’s easier to not make any. Sometimes people get hung up on selecting a guardian for their minor children. Because they can’t choose one, they don’t do anything else in their estate planning. Another example is the person who is so worried about giving money to her kids. Because she knows they can’t handle it, she makes no plans at all!

3. Inattention. Outdated plans are a major problem in estate planning. If folks don't review their documents and update them when necessary, their estate plans become obsolete. The complexity of the subject, the constantly changing tax laws, and "estate planning fatigue" can contribute to frustration and anxiety, which causes people to avoid taking any action or to procrastinate.

Your estate planning attorney can give you an annual analysis of your total assets available for heirs. You can then re-examine how much you want to give to your heirs. Think of it not as making lifelong decisions, but as making decisions twelve months at a time. Look at it as re-comforting yourself every twelve months, and you can feel better knowing you’re doing OK.

08/17/2015

The widow of Ernie Banks is scheduled to meet in person next month with the longtime caretaker named as the sole beneficiary in his will to see if they can come to a resolution on how to divide up the slugger's estate. The settlement conference set for September 25 will mark the first time Elizabeth Banks and the caretaker, Regina Rice, have come together since controversy erupted over Banks' will in the wake of his January death of a heart attack at 83. If no agreement is reached in the closed-door meeting with Cook County probate Judge James Riley, the case could be headed toward a protracted and expensive legal battle that would potentially drain Banks' estate of whatever assets are left.

Elizabeth Banks, who was estranged from Ernie when he died, alleged in a recent court filing that her husband had been diagnosed with dementia days before Rice had him sign a will in October 2014. The new will cut out his family and left the whole ballgame to Rice. Rice said that Ernie entrusted her to execute the will and that he wanted to make sure his fourth wife didn't get any of his estate. Court records show that Ernie sent her a "cease and desist" letter in 2013 requiring her to stop claiming any right to his personal or business dealings.

Despite both sides pitching heated accusations, Rice’s attorney told the judge that she wanted to go ahead with a settlement conference due to the limited assets in the estate. The attorney said that it was in everyone's best interest to resolve the estate in "a peaceful manner."

Rice filed an inventory of Ernie’s personal property earlier this year. This consisted primarily of things from his rented condo and storage containers in Chicago and California. The list included Banks' original Negro League contract from 1950, a Rolex watch, his Hall of Fame ring, and the Presidential Medal of Freedom. There are also other assets in a private trust set up in Rice's name under the terms of the will.

Banks' twin sons, Joey and Jerry, were not present for the legal proceedings. The two publicly accused Rice of taking advantage of their father's frail condition and vowed to fight her in court when the will became public.

The probate judge said the deadline for them to file the paperwork to be participants in the case was approaching. However, if the case settles before that time, Ernie’s sons wouldn’t be able to contest any award they were given. The judge also approved a spousal award of $20,000 for Elizabeth Banks, which is the minimum amount allowed under the state's probate law. Rice's attorneys objected because she hadn’t shown that she relied on Ernie for financial support at the time of his death, but the judge said the law was clear.

Estate contests are messy. You can help avoid them by getting quality estate planning advice and a sound strategy from an estate planning attorney.